Student Loan Debt Crisis

by Gerri Willis

President Obama back on the campaign trail today, promoting his plan for the looming student loan debt crisis:

“This country has always made a commitment to put a good education within the reach of all who are willing to work for it. That's what makes us special. That's what made us an economic superpower. That's what kept us at the forefront of business and science and technology and medicine. That's a commitment we have to reaffirm today in 2012.”

Student loan debt is a huge problem. It’s now over a trillion dollars, more than credit card or auto loan debt in this country.

But the President's solution?

Extending the super-low federal loan rate: 3.4% interest.

Obama thinks we should spend six billion dollars on a one-year, election-year fix.

This does nothing to address the rising cost of college, which is going up at three times the rate of inflation.

The President's plan just makes it easier to take on a huge amount of government-backed debt, and easier for the colleges to raise prices.

But if we spend more money, do we get better education?

No.

In a landmark study, nearly half of students showed no significant gain in critical thinking or writing skills after two years in school.

How's that for value?

Maybe these students are having trouble finding jobs because they don't have the skills to work.

So where's all this money going?

The University of Missouri’s gym boasts an indoor river and waterfall, surrounded by palm trees.

Looks nice right? But what's the point? Are you going to learn about fluid dynamics? Come on.

What's the lesson here?

Today, schools are in an arms race, building fancy new facilities, vying to win over more students - and their government-backed loans.

It's the new entitlement: Go to a fancy school, goof off, and let Uncle Sam be responsible for the bill.

The rate of students defaulting on their loans has been going up every year since even before the recession hit.

This could be the next debt bomb, and our economy is not equipped to handle it.

Not when eight out of ten student loans are backed by the government.

It's time to hold the students and the schools accountable.

Throwing more tax-payer money at the problem is never the solution.

Give Parents a Choice!

by Gerri Willis

One of the most contentious issues in public education in this country, in addition to teachers unions, is school vouchers.

But to me, it's pretty straight forward. Vouchers help parents pay for private schools - giving their kids more opportunity, and in some cases, a safer choice - without putting their retirement on the line, and going broke in the process.

And I’m not alone in that thinking. Nineteen states and Washington D.C. have a voucher system or similar program, according to the Wall Street Journal.

In fact, in some cases now, these vouchers can be used for state apprenticeships and college courses.

Wisconsin is home to the nation's oldest voucher system.

With over 20,000 students participating - the average cost is about six thousand dollars. That state concentrates its dollars on lower income families. In big cities like Milwaukee, families making less than $70,000 a year are the only ones eligible.

And the use of vouchers has skyrocketed since 2010 with more than 220,000 students currently enrolled in these programs.

Since then, states like Virginia, Florida and Indiana have created or expanded their programs.

Louisiana will soon have the nation's largest voucher program once the governor signs it into law next week.

The overhaul would mean upwards of 380,000 students would be eligible for the program - up from 1,800 in 2009.

Like I said, I think the upside of these vouchers is pretty clear: an opportunity to escape poor-performing schools, but it also greatly saves taxpayer money.

Yes - for the state government - often these private school vouchers are cheaper than sending a kid to public school.

Let's look back at Louisiana. Currently the state spends about $8,500 a pupil to educate public-school students, but only about $4,500 on voucher students.

Sounds like a win-win to me.

To be fair, there are conflicting studies on the academic benefits of these vouchers, but all I know is if my kid felt safer and happier going to school... at an institution that would put him or her on a better path for the future... that's all the research I need.

Giving families options when it comes to their children's education can only help in the long run.

Is College Really Worth It?

by Gerri Willis

President Obama delivers remarks on college affordability at the University of Michigan in Ann Arbor. 01/27/2012.The President hitting education hard on the campaign trail today at the University of Michigan: an issue he touched on during his State of the Union address on Tuesday.

“Higher education can't be a luxury,” said the President. “It is an economic imperative that every family in America should be able to afford."

The President vowed in his first year of office the country would have the highest number of graduates in the world by 2020.

According to Harvard University, nearly 70% of high school students go to college within two years of graduating high school.

And a small but growing number of high schools require students to take college entrance exams.

Everybody seems to be on the college bandwagon.

But should everybody go to college?

And is college the right of every American?

The numbers say there is every reason to think we are over-selling college in our society.

Consider this: federal data shows fewer than 60% of new students graduate from four-year colleges in six years, and just one in three community college students earn a degree.

More than 350,000 students who borrowed for college in 1995 had no degree six years later.

That's according to the National Center for Public Policy and Higher Education.

It's time for us to start considering that many students are wasting time and money.

Of those who do graduate, many emerge burdened with debt that will take them years to pay off: some $24,000 on average, a burden that too often means the delay of marriage, children and home buying.

Yes, college degreed workers are more likely to be employed in this economy.

But it's no guarantee of a job, and college grads don't always make more money than people without four-year degrees.

In fact a college degree is no guarantee of wealth. About 25% of those with bachelor degrees make less money than those

My view is this: we are just way too sentimental about "Old Ivy" and the value of the education students are getting these days.

The college dropout rate exceeds the graduation rate.

What's more, the jobs of the new economy, advanced manufacturing jobs, won't require college education, but will require training.

Look, I don't begrudge people getting degrees, but I also don't think everybody has to do it.

Costs have spiraled so dramatically, up 57% in twelve years, the average tuition and fees expenditure for a private non-profit school is $28,000.

Meanwhile, more and more students are defaulting on their debt.

According to the Education Department, student loan default rates have risen to 9%.

More debt, fewer degrees. And job insecurity.

Students should be encouraged to do what they do best, not forced to pursue a degree they may not want or need.

Surprising Stats on Student Debt

by Gerri Willis

One-hundred billion dollars in new debt. Total debt? A trillion dollars.

No, I'm not talking about credit card debt or mortgage debt or even the debt of our federal government. I'm talking about student loan debt - money owed by students and former students to the federal government to pay for college.

At a time when Americans have been rolling up their sleeves and paying down credit card and mortgage debt, student loan debt stands out as the one category growing by leaps and bounds. That debt has doubled in just the past five years - and it's pretty easy to see why.

Colleges charge students more and more to attend school. The published tuition charges - $7,600 for in-state students at public four-year colleges and $27,000 thousand at private schools way understates what students might pay. After all, you've got to live somewhere - then there's the pizza and the beer. And, books.

The problem of high costs is compounded by the fact they go up - a lot - every year - finaid.org puts average annual college cost inflation at 8 percent - at that rate the cost of college doubles every nine years!

To soften the blow, the federal government has eased loan repayment terms - true, you will eventually have to pay it back - even bankruptcy isn't an excuse not to pay - but still you can slow or stop payments for a variety of reasons if you meet requirements of the feds.

But that's not the real answer to all this overblown debt - debt that causes students to delay marriage, the purchase of a home - and just about every other critical financial milestone. As one New York politician once said - the rent is too damn high - in other words, colleges are charging too much - in their war for paying customers - expensive perks and features have become a critical way to win the best minds.

But a sushi bar in the lunchroom isn't the way to do it. A state of the art gym open at all hours for all comers isn't it either.

Any solution shouldn't be about kicking the can down the road. Delaying the payment of debt in the hopes that maybe later we can afford it. I feel the pain of students - but the answer isn't to put the burden on others - like taxpayers. Lower rates on federal loans is not free and better terms for borrowers will come at the cost of someone down the road. Most likely that next generation.

Thousands of Workers Needed!

by Gerri Willis

Pres. Obama inspects a wind turbine blade at the Siemens Wind Turbine Blade Manufacturing Plant in Fort Madison, IowaThe jobs depression continues to plague this nation. If you're not unemployed yourself, no doubt you know someone who is. Fourteen million of us looking for work two years after the Great Recession. But there is a myth about this economy that I want to expose tonight. That myth is that it is impossible to find a job because there are no jobs. But guess what, it's not exactly true.

Manufacturers are struggling to fill thousands - yes thousands - of jobs!

A survey by Manpower Group found a record 52% of employers have difficulty filling positions. Thank about that - they can't find workers for the jobs they have.

On average, companies usually take seven weeks to fill job openings. But for some manufacturing companies it's taking more than twice that long! And I'm not talking a few jobs here and there.

Technology giant Siemens has over 3,000 jobs open all over the country!

According to the Labor Department - there were nearly a quarter of a million open jobs in manufacturing in August - up nearly 39% from a year ago!

If unemployment is so high, why are these companies struggling to find workers? Why aren't people lining up for a paycheck?

Simple: Many just don't have the right skills for the job!

Most of the hard-to-fill jobs are for skilled trades, technology, engineers and machine operators.

Back in 1980, math, engineering, technology and computer science students accounted for more than 11 percent of college graduates.

Thirty years later, the number is less than nine percent.

Students are choosing different directions despite the fact the numbers clearly favor these types of skills.

According to the Conference Board: One worker applies for every three of these types of jobs.

Compare that to roughly three people for every one job in sales!

And it's not like these jobs are the assembly line jobs you've seen depicted in the movies. You know 20 hour days, no pay, no breaks. In fact, many of these jobs are really high-paying ones!

Workers at low levels can make as much as $30 dollars an hour.

Annual salaries for engineers can reach the six figures in some cases!

That company, Siemens, I just mentioned - the average salary for their three thousand open positions, $89,000!

An aging population of skilled workers is adding to the problem - as with many industries retiring baby boomers are tough to replace.

It's also a potential sign of the future. That the jobs market isn't just in a downturn - it's completely changing.

Many companies are trying short-term solutions. But the only long-term one is to get America back into the manufacturing game!

We need to want to make things again - and we need to educate people enough to do it.

So this can serve as a message to all those younger people camping out on Wall Street: It's not "the man" keeping you unemployed. Maybe you're just not looking in the right places!

Willis Report Special Investigation

by Gerri Willis

Please join us Friday for a special Willis Report investigation on jobs in America. Where are the jobs? who's hiring and why, also who's not hiring and what's stopping them? Has America entered a new paradigm where high unemployment is the norm or even acceptable - like some European countries. What role is education playing and what, if anything, can (or even should) the federal government do to jump-start the job market? Can we restore America's competitiveness - and is increased immigration really the solution as many economists are suggesting? We'll investigate the story from all angles of public policy, regulation and private enterprise.. right down to what individuals are doing.

Please join us Friday 5pm ET on the Willis Report on the Fox Business Network.

What Parents Should Tell Their Kids About College

by Gerri Willis

All week, The Willis Report has been focusing on the problems with education in our country and they are severe. Low graduation rates. High costs. Poor college prep. But for parents of college-aged kids there is one issue that transcends all others: The cost. The rise in the price of tuition for a four-year college is astronomical, climbing 439 percent over the last 30 years. Tuition prices have been rising faster than for any other product or service. To be sure, colleges are offering more and more to attract the best candidates – elaborate gyms and sushi bars among other perks, but parents need to think carefully about what they and their child can afford before making a decision on a school. Remember, your child can borrow for their education, but you cannot borrow to fund your retirement. Keep your choices well within affordability limits. And, the earlier you start saving the better off you’ll be. State-operated 529 plans offer some of the best flexibility and options for parents who want to save and allow those savings to accumulate tax free. But students should be encouraged to participate in this decision as well. Arm your child with likely starting salary numbers from a website like www.salary.com. Help them understand how much their monthly student loan bill might be after graduation, and how much they’d have to spend after paying that bill. At the end of the day, students and parents have to weigh their wishes and wants against the cost of education. Because if you overpay, you’ll end up shortchanging yourself. Parents may lack the means to finance their retirement, while grads delay marriage and buying a housing to pay off that college debt.

College isn't worth it!

by Gerri Willis

There is no doubt about it - the rising costs of tuition in this country is making college a worse and worse deal for American students. College costs are rising at a pace faster than either health care or gas prices - up more than 400 percent since 1982. It's like watching the housing bubble - prices rise, but for no good reason.

Part of the problem is that schools compete for prestige - the best students, the highest entering GPAs for freshman classes. Exclusivity is what Mom and Dad end up paying for. The lower the acceptance rate at any given institutions - the better most families think the school is and the higher it is likely to rank on all-important education surveys.

To that end, schools spend those precious tuition dollars and our taxpayer dollars on perks like state-of-the-art fitness centers and sushi bars. But those are goodies most students would leave behind if only tuition costs could be more reasonable.

There's one metric that many parents don't focus on that they should: What are graduation rates at their favorite college options? According to Education Sector, a non-profit education think tank, only 57 percent of bachelor degree students graduate in SIX years. That's appalling.

Any parent weighing college options right now should make a frank assessment of their student's interests and abilities. Where will their son or daughter be happiest? What institution best fits their needs and ambitions? This is a time to leave your emotions behind. The financial drain of a college education is severe -- $35,000 for a private institution and $9,000 for a public one - and that doesn't count the pizza and beer and whatever else your Einstein will want on campus.

Look, I'm not saying college isn't right for anybody, but it's not right for everybody and making an expensive choice can saddle your family with debt for decades. It's commonplace these days for grads to put off marriage, having children or buying a house because they want to pay off college debt first. In the end, being pragmatic about an expensive purchase is always makes sense. Showing your kids how to be smart with their money is a gift they will reap for years to come.

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